I carried out a 15 yr review of my pension the other day. XIRR (Money Weighted Rate of Return Calc) was a reasonably pleasing 9.36% annual compound. As a 'larf' I re-ran the figures to calculate what it would have been, had I instead just invested only I to either 1) a FTSE 250 Tracker and 2) a Gold Price Tracker. The former would have returned a paltry 2.13% for me annually. The latter would have returned a staggering 15.85% annually compounded for the last 15 yrs.!
Now, I'm in no way suggesting anyone would want or should hold 100% exposure to Gold, but what a stark example of how rubbish UK Plc and the GBP has been. Truly a lost decade and then some, with no signs of improvement on the horizon.
I bear in mind Marc Faber's caution as written in his Doom, Boom and Gloom report that this time around, it may not be which asset has gained in a crash but which asset has lost the least.
On your general point, yes, gold has done very well so far against Sterling and I believe all fiat currencies.
I agree retail selling gold would make me sit up - I remember the silver mania too. But wasn't it Volcker putting U.S. interest rates up to unprecedented levels that killed gold's rise? Where is the Volcker of today to defend the economic system, fiat currencies and, as a corollary, government debt? Or Draghi's, 'whatever it takes'? I don't hear anyone yet and that is not good, at least as an aid to determining a number for the top. Retail can sell but where is the Establishment force to give substance to their instinct? If it isn't there then the top could be any number and retail has sold too early and that is a pain. I am talking in circles, as a trader, the top is when retail sells, at whatever level - and perhaps when gold bugs are screaming "Buy!". My thinking though illustrates how easy it is to stay in even, with hindsight, at ludicrously high levels. Bitcoin, anyone?
Spot on. Until we see those “We buy gold” signs everywhere again, this bull still has breath left in it. Given the global debt spiral and currency decay ahead, the next wave could carry further and last longer than most expect.
I got the perfect (interim) top signal when my mate who thinks he is an investor but is actually a spectulator told me he'd put 70% of his pension in gold. 70%!
I have been in the gold trade for over ten years. I added to my position along the way (prior to 2020). As a result of Gold's dramatic rise I am now 75% gold. Well at least I started off as a prudent investor!
In past gold bull markets (1971-80 & 2001-2011) central bank purchases were not a contributor. In fact I think that from 2001-2011 central banks were still net sellers? So maybe what retail does will not be a very reliable signal in the current bull market? In addition to central banks' purchases of gold to support the currency the BRICS countries may be buying additional gold to fulfill net trade flows settlement (in gold) as they move away from the dollar? This is what I wonder about!
Interesting point on central banks' buying but it does not invalidate the indicator that when retail is queuing up to sell, it is time to get out, or, at the very least, take profits so what's left is the market's money.
One might argue that central banks buying could maintain the hysteria but, in my view, hysteria it will be.
On your point about BRICS buying and trade flows, I don't think there is enough of it.
I carried out a 15 yr review of my pension the other day. XIRR (Money Weighted Rate of Return Calc) was a reasonably pleasing 9.36% annual compound. As a 'larf' I re-ran the figures to calculate what it would have been, had I instead just invested only I to either 1) a FTSE 250 Tracker and 2) a Gold Price Tracker. The former would have returned a paltry 2.13% for me annually. The latter would have returned a staggering 15.85% annually compounded for the last 15 yrs.!
Now, I'm in no way suggesting anyone would want or should hold 100% exposure to Gold, but what a stark example of how rubbish UK Plc and the GBP has been. Truly a lost decade and then some, with no signs of improvement on the horizon.
I bear in mind Marc Faber's caution as written in his Doom, Boom and Gloom report that this time around, it may not be which asset has gained in a crash but which asset has lost the least.
On your general point, yes, gold has done very well so far against Sterling and I believe all fiat currencies.
Well, yes indeed!
I agree retail selling gold would make me sit up - I remember the silver mania too. But wasn't it Volcker putting U.S. interest rates up to unprecedented levels that killed gold's rise? Where is the Volcker of today to defend the economic system, fiat currencies and, as a corollary, government debt? Or Draghi's, 'whatever it takes'? I don't hear anyone yet and that is not good, at least as an aid to determining a number for the top. Retail can sell but where is the Establishment force to give substance to their instinct? If it isn't there then the top could be any number and retail has sold too early and that is a pain. I am talking in circles, as a trader, the top is when retail sells, at whatever level - and perhaps when gold bugs are screaming "Buy!". My thinking though illustrates how easy it is to stay in even, with hindsight, at ludicrously high levels. Bitcoin, anyone?
Thanks Christopher.
It didn’t kill Gold‘s rise that day I don’t think but it killed the broader bull market for sure and began the bear
Spot on. Until we see those “We buy gold” signs everywhere again, this bull still has breath left in it. Given the global debt spiral and currency decay ahead, the next wave could carry further and last longer than most expect.
Thanks Robert!
Headline in today's Telegraph:
"Nvidia worth as much as German economy as value tops $5tn".
Remember when the Emperor's palace in Tokyo was valued at the same price as the whole state of California?
If the general market crashes, it will take everything with it, including gold (and bitcoin). Remember, what gets sold is what can be sold.
Sometimes cash is king. U.S. dollars as a preference. I wonder too if a nibble at TLT might not be an idea. (Others say, the yield is going to 10%.)
Jim Rogers is cashed up, I saw on a youtube video, though not shorting yet.
Or the party continues... Ya pays your money...
True indeed
I got the perfect (interim) top signal when my mate who thinks he is an investor but is actually a spectulator told me he'd put 70% of his pension in gold. 70%!
I must confess:
I have been in the gold trade for over ten years. I added to my position along the way (prior to 2020). As a result of Gold's dramatic rise I am now 75% gold. Well at least I started off as a prudent investor!
That's slightly different. Something similar happens with bitcoin when it keeps rising. It distorts portfolio allocation ...
Yikes
In past gold bull markets (1971-80 & 2001-2011) central bank purchases were not a contributor. In fact I think that from 2001-2011 central banks were still net sellers? So maybe what retail does will not be a very reliable signal in the current bull market? In addition to central banks' purchases of gold to support the currency the BRICS countries may be buying additional gold to fulfill net trade flows settlement (in gold) as they move away from the dollar? This is what I wonder about!
Interesting point on central banks' buying but it does not invalidate the indicator that when retail is queuing up to sell, it is time to get out, or, at the very least, take profits so what's left is the market's money.
One might argue that central banks buying could maintain the hysteria but, in my view, hysteria it will be.
On your point about BRICS buying and trade flows, I don't think there is enough of it.